London: After seven difficult years the Benelux consulting market grew by 2.5 per cent in 2014 and is now valued at more than €1.8billion, according to new report from Source Information Services (Source).
Luxembourg, the smallest Benelux consulting market grew by 4.1 per cent to €198million, spurred on by regulation and a growing interest within the financial services sector in digitisation. The much bigger consulting markets of Belgium (€567million) and the Netherlands (€1billion) grew at a slightly slower rate, both 2.3 per cent, against the backdrop of an improving economic situation.
Zoë Stumpf from Source commented: "Difficulties remain in the Benelux region, particularly for mid-sized firms who are too small to win big transformation projects with the region's multinational clients, but too big not to be undercut on price by its large population of freelancers.
"These freelancers continue to be a major part of what's creating polarisation in the Benelux consulting market, between commodity consulting on one hand, and luxury consulting on the other. That has implications from a price, model and brand perspective, particularly for firms which try to have a foot in both camps."
Financial management and risk on the rise...
From a service perspective, financial management and risk was the biggest riser in 2014, growing by 3.6 per cent to €276million. A tough regulatory environment, not just in financial services but also in sectors like pharma and energy, accounted for much of this. Risk, especially in respect of cybersecurity — is moving up the agenda for many clients and creating work for consultants.
Technology, the region's largest service, grew above the market average — rising by 2.9 per cent to €658million in 2014. Growth is expected to continue in technology, with the Source report revealing that over half of Benelux's consulting clients expecting to spend more on this area over the next 18 months.
The Source report also points out that the strong interest in digital services is also an encouraging sign for technology consultants. However, some clients are further along their digital journey than others. Financial services companies, for example, are at the forefront of exploring what is possible in terms of transforming customer experience via new channels and products. In other industries, although certain clients have started to get to grips with the possibilities that digital offers, which is leading to large transformation programmes, overall across the Benelux region take-up is patchy.
Jeroen Dossche, Partner at Capco said: "Banks are looking to be much more aggressive on digital and mobile, and they want to take big steps in a more fundamental manner."
Financial services, the region's biggest buyer of consulting services, grew the fastest — up 4.2 per cent to €537million. Regulation accounted for much of this growth but many organisations are involved in broader transformation programmes, particularly around digital. The sector does remain fiercely competitive from a consulting perspective, and clients often spend money on consultants nervously and reluctantly.
Zoë Stumpf from Source concluded: "Having endured a longer run of economic hardship than its northern-European neighbours, the Benelux region appears to be emerging from the malaise that has gripped it for seven long years and delivering growth to its embattled consulting market. Despite that, you can forgive consultants for eyeing the return of better times a bit nervously. Their language, far from being an outpouring of relief, is measured, even guarded. Perhaps that's because the recovery is still in its nascent phase: the consensus among most consultants is that the first half of 2014 was still very difficult and that it wasn't until deep into the year that things really began to pick up."